What does work in progress mean? From accounting concept to strategic tool

What exactly is work in progress?

Work in progress (WIP) is the value of work that has already been carried out but has not yet been invoiced or completed.

For example:

• hours that have already been worked
• materials that have already been used
• tasks that have been partially completed

but for which no invoice has yet been issued.

You can also put it like this 👉🏻 it is work that has already created value, but has not yet been converted into revenue.

For organisations that operate on a project basis, this amount can become significant. Especially when projects are long-running or invoicing only takes place at the end.

Why this matters in practice

It may seem like a purely financial concept, but it has a direct impact on how your organisation operates.

1. Insight into what is 'tied up' in projects

If you have completed a lot of work but invoiced very little, a substantial amount of value is tied up in your ongoing projects. This means:

• you have incurred costs
• but have not yet received income

This can put pressure on your cash flow, particularly in larger projects.

2. A more realistic view of performance

Without this insight, projects may appear unprofitable in the early stages and only profitable later on. In reality, value is built up gradually.

By tracking this properly, you avoid drawing incorrect conclusions about:

• project profitability
• team performance
• or financial health

3. A direct link to your planning

This is where it becomes particularly relevant. To determine how much work has been completed, you need to know:

• what was planned
• what has actually been done
• and where you currently stand

This means it is not just an finance topic, but very much an operational one.

A practical example

Let's make it tangible. Imagine you are working on a project with a total value of €120.000. According to the plan, you should be halfway through the project.

Step 1: determine how much work has been completed

In reality, your team has completed 40% of the work.

👉🏻 40% of €120.000 = €48.000 worth of completed work.

Step 2: review what has already been invoiced

So far, you have invoiced the client €30.000.

Step 3: calculate the difference

So:

• €48.000 of work has been completed
• €30.000 has been invoiced

The difference is: €48.000 - €30.000 = €18.000

This €18.000 represents your work in progress.

What does this actually tell you?

It means you have already delivered €18.000 worth of value, but have not yet invoiced it.

However, there is another important conclusion.

Remember at the start: you were supposed to be halfway through the project, but you are only at 40%.

This example clearly shows that work in progress is not just a financial concept.

Without proper planning insight, you only see:

• €18.000 is outstanding

With effective planning, you also see:

• why that is the case
• and whether you need to take corrective action

Where things often go wrong in practice

Many organisations struggle to gain a clear view of this. This is rarely due to a lack of knowledge, but rather how processes are set up.

Common situations we see:

• planning is managed in Excel
• hours are recorded after the fact
• progress is estimated manually
• systems are not integrated

This leads to issues such as:

• figures lagging behind reality
• unreliable progress tracking
• discrepancies only becoming visible late on

The result is that adjustments are made when it is already too late.

The role of work in progress in project management

Within project management, this insight helps you understand how a project is really performing—not just financially, but operationally.

You can compare:

• planned progress
• actual execution
• invoiced progress

If these are not aligned, you know something is off. For example:

• execution is behind 👉🏻 capacity issue
• invoicing is behind 👉🏻 cashflow risk
• planning is inaccurate 👉🏻 incorrect estimation

This makes it a powerful tool for steering projects effectively.

Why planning is decisive

To determine this accurately, you need reliable input—and that starts with your planning.

A solid plan answers:

• what work is scheduled and when
• who is responsible
• how much time is allocated

By tracking what actually happens, you can clearly see:

• whether you are on schedule
• where delays occur
• how much work has been completed

Without this connection, you are effectively guessing.

From retrospective reporting to real-time insight

Traditionally, work in progress is calculated retrospectively—often at the end of the month, based on hours and financial data.

This means:

• you look back
• you correct afterwards
• you miss the opportunity to act in time

More and more organisations are moving towards real-time insight.

This means:

• continuous visibility of progress
• immediate awareness of deviations
• faster response times

As a result, the role of this concept shifts 👉🏻 from retrospective reporting to active project steering.

What planning software changes

To make this possible, a standalone plan is not enough. You need a system that connects planning and execution.

Planning software plays a key role here.

1. Up-to-date overview of all activities

You can instantly see:

• what is planned
• what is in progress
• what has been completed

This ensures you always know where you stand.

2. Immediate insight into progress

Because execution feeds back into the plan, you immediately see:

• whether you are ahead or behind
• which projects require attention

This prevents surprises at the end.

3. A stronger foundation for financial insight

When you know how much work has actually been completed, you can better determine:

• how much value is in your projects
• how much can still be invoiced

This turns work in progress from an estimate into a logical outcome of your planning.

Strategic benefits for your organisation

When planning and progress are well managed, the impact goes beyond individual projects.

You benefit from:

• more predictable revenue
• fewer surprises in projects
• more efficient use of capacity
• better control over deadlines

It also improves collaboration, as everyone works with the same data.

Common mistakes

Organisations that struggle with this often make similar mistakes:

❌ Overreliance on retrospective data

Hours and costs are recorded later, so insight is always delayed.

❌ Lack of system integration

Planning, time tracking and invoicing operate separately, leading to inconsistencies.

❌ Insufficient focus on progress

Management focuses on end results, rather than what happens during the process.

How to improve this in practice

If you want better control, these are the steps to follow:

1. Make planning the leading element

Not just an overview, but the basis for decision-making.

2. Work with up-to-date data

Avoid reliance on retrospective records.

3. Make progress visible

Not only at project level, but per phase or task.

4. Connect planning to execution

So you can see what is actually happening.

5. Use software that supports this

Manual tracking simply does not scale.

Conclusion

Work in progress is often seen as an administrative concept, but in reality, it reflects how well your organisation manages its projects.

It shows:

• how much work has been completed
• how much value it represents
• and how this relates to planning and invoicing

The quality of this insight depends on your planning. Organisations that approach this effectively:

• work with accurate, up-to-date data
• have continuous visibility of progress
• and can adjust in time

As a result, the role of work in progress changes.

It is no longer just a figure after the fact, but a practical steering mechanism during the project itself.

Want to find out how vPlan can give you better insight into your work in progress? Discover it today and create your free environment.